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Chinese bank notes from faithful are placed in front of a portrait of Tibetan spiritual leader Dalai Lama at Kumbum monastery, where Dalai Lama used to live, on the outskirts of Xining, Qinghai province, July 6, 2013.

Credit: Reuters/Kim Kyung-Hoon

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CHABCHA COUNTY, China (Reuters) - The streets of Chabcha county in western Qinghai province were quiet on Saturday as Tibetan monks marked the Dalai Lama's birthday in their homes, wary that any public celebration could endanger a tentative softening by Chinese authorities.

Tibetans in China have always had to steer clear of public ceremonies revering their 78-year-old exiled spiritual leader who Beijing has denounced as a "wolf in monk's robes".

But in the run-up to this year's anniversary, authorities in Qinghai had discussed proposals to ease restrictions including allowing Tibetans to openly display photographs of the Dalai Lama, the International Campaign for Tibet said.

On Saturday, however, there was no sign of any celebration with many ordinary Tibetans not even aware it was his birthday.

At the Kumbum monastery close to Qinghai's capital, Xining, monks prayed in a room next to another that was built as a shrine to the Dalai Lama, whose photograph was displayed.

"We'll celebrate his birthday at our homes privately but we'll never do it in the open," said Khedroob, 40, a monk at the Kumbum monastery.

"But we don't have to wait for a special day to celebrate, we celebrate him everyday."

Khedroob said he had received a text message on his mobile phone that authorities in Qinghai have discussed allowing Tibetans to display images of the Dalai Lama, but added he didn't know whether to believe it.

Officials had also discussed the possibility of ending the practice of forcing Tibetans to denounce the Dalai Lama and to reduce the police presence at monasteries, the International Campaign for Tibet said last week.

The report triggered speculation that the authorities are contemplating looser religious restrictions in the Tibetan regions of China.

The speculation has been fuelled in part by an essay written by a scholar from the Central Party School, who said that China could take some steps toward resuming talks with the Dalai Lama's representatives, which broke down in 2010. That essay has given hope to observers looking for signs of change from Chinese President Xi Jinping, who took office in March.

China's State Administration of Religious Affairs denied that the government is changing its policy towards the Dalai Lama. In a faxed reply to Reuters, the agency said the Dalai Lama has to give up his stance on independence for Tibet.

Beijing considers the Dalai Lama, who fled China in 1959 after an abortive uprising against Chinese rule, a violent separatist. The Dalai Lama, who is based in India, says he is merely seeking greater autonomy for his Himalayan homeland.

Still, the timing of these possible policy shifts suggests that the Chinese Communist Party hopes to defuse tensions that have mounted since 2008, after riots that broke out in the Tibet Autonomous Region and the Tibetan parts of China led to a government crackdown.

If China was to allow grassroots worship of the Dalai Lama in Qinghai and neighbouring Sichuan, it would mark a reversion to the norm before 2008, according to Robbie Barnett, director of modern Tibet studies at Columbia University.

It is unclear whether these adjustments were mandated by Beijing, but there are signs that the new leadership is becoming more pragmatic when it comes to policy on Tibet, Barnett said.

"Under (former President) Hu Jintao, the pragmatists kept quiet or convinced themselves to accept the Hu Jintao hardliner approach," Barnett said. "Now they are shifting and indicating that was a failure."

"But whether they can overcome internal resistance to change, and how far any change could go, that is the big question."

SUCCESSION LOOMS

Tibetans, however, were unsure if things had changed. A monk in the Ganzi monastery in Sichuan told Reuters by telephone that he had received a text message in Chinese that Tibetans were allowed to display photographs of the Dalai Lama.

"We are still too afraid to do so even though we have received these messages," he said. "We can't confirm whether it is true, since we haven't been informed by the government."

Elliot Sperling, a professor of Sino-Tibetan relations from Indiana University, said the Chinese government is taking a "utilitarian" position in attempting to engage with the Dalai Lama as it contemplates the thorny issue of his succession.

"None of this reflects a desire on the part of the government to change policy because it runs counter to human rights norms or because it is unjust."

Many Tibetans fear that Beijing will simply appoint its own replacement to the Dalai Lama -- a scenario that will almost certainly cause violent protests in Tibet.

The Dalai Lama has suggested that his incarnation might be found outside of Chinese-controlled territory, and has said that the succession process could break with tradition -- either by being hand-picked by him or through democratic elections.

Ultimately, it does not matter whether Tibetans are allowed to display photos of the Dalai Lama, Pema Rinchen, the abbot of Guangfa monastery in Sichuan province, said by telephone.